Mobile Communication to Drive Taiwan Semiconductor Investment

Mobile
Communication to Drive Taiwan Semiconductor Investment

By Clark Tseng, SEMI Taiwan, Industry
Research & Statistics

The
era of mobile communication has certainly changed the dynamics of the semiconductor
industry, especially for fabless companies, foundries, and OSATs. The rising
demand for mobile chips seems to gather unstoppable momentum which drives
further investment into advanced technologies and manufacturing capacities.

Taiwan
sets a good example of riding the tide of mobile demand surge. The leading
foundry supplier, TSMC, has announced their plan of tripling 28nm production
this year by increasing their capital expenditure to over $9.5 billion in order
to fulfill surging mobile chip demand. That alone is expected to drive double
digit growth of fab equipment spending in Taiwan this year while SEMI only
forecast 2 percent growth worldwide (with some regions showing negative growth).
We expect foundries to continue their hefty investment into 2014 with the
ramp-up of 20nm production. Foundry capacity is expected to account for 70
percent of overall Taiwan semiconductor capacity by the end of 2014. On the other hand, the Taiwan DRAM industry is
expected to see some spending improvement from 2H2013 onward due to product mix
change (to mobile DRAM) and node migration albeit no capacity addition plans in
the near future. Mobile DRAM has become the savior of DRAM industry thanks
again to mobile devices.

The
strong demand for mobile chips has also driven related investment into semiconductor
packaging and testing services along the supply chain. Major OSAT companies in
Taiwan therefore are revising upwards their 2013 capex plans and are pouring
more resources into advanced packaging and testing capabilities. Recent
financial results from OSAT companies have suggested strong growth is to
continue into the second half of 2013 and some manufacturers may expect tight
supply of advanced packaging and testing capacity. The expansion plans now
focus on bumping, flip chip, wafer-level chip-scale packaging (WL-CSP), and the
development of 2.5D/3D IC packaging rather than copper wire bonding capacity which
OSATs built up over in recent years. We have also noticed the uptick investment
in related mobile chip packaging and testing in areas like CMOS image sensor, small-sized
LCD driver ICs, IC substrate for FC CSP, and other advanced packaging form
factors.

The
momentum of mobile communication shall continue in coming years with the
advance of technology nodes and capacity build-up by leading foundries and OSAT
suppliers. Taiwan will certainly play a pivotal role in this market going
forward. However, the business model between foundries and OSAT could be
subject to change with the introduction of 2.5D/3D technologies along with
major clients’ preferences. In addition, rising capital intensity may also be
the major challenge that tier 2 players have to face in near future in
considering their investment decisions for advanced technologies.

In the upcoming SEMICON Taiwan 2013 — the premier
microelectronics event in Taiwan which will be held on September 4-6 in Taipei
— mobile trends will be highlighted in the Executive Summit and technical presentation sessions including IC
design summit, MEMS forum, memory system executive forum, as well as SiP Global
Summit 2013. More over
110 business and technology sessions will be addressed during the three days.
The Executive Summit gathers Dr. Roawen Chen, senior VP of Qualcomm, Dr. Chi-Foon
Chan, Co-CEO of Synopsys, Mr. Ajit Manocha, CEO of GlobalFoundries, and Dr. CC
Wei, EVP and Co-COO of TSMC to share the trends of design and foundry
innovation driven by the new mobile era. Other heavyweight speakers from leading companies
such as ASE, GLOBALFOUNDRIES, IBM, Micron, STMicroelectronics, TSMC and
Qualcomm will share their updates on cutting-edge technologies. Registration for
SEMICON Taiwan 2013 is now open at www.semicontaiwan.org. Register before August 9 to get
the program early-bird discount.